Ad spending: maintaining market share.

Abstract

Accuracy in manufacturers' advertising budgeting is hampered by reliance on the case rate system, which ties budgets to sales. A better measure is a brand's market share compared with its share of voice (the brand's share of the total value of the main media exposure in that product category). New brands are often "investing" in the market: speaking in a louder voice than their market shares would justify. Popular brands are often "profit taking"--keeping their voices low but enjoying a disproportionately large market share. The interrelationship between market share and share of voice, with either "investing" or "profit taking" the desired result, is not usually considered when determining ad budgets. But as advertisers realize how market share can respond to advertising pressure through switches in the share of voice, this method of market testing should gain in importance.

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